Interindustry trade is not based on comparative advantage since it consists of the export and import of similar countries and mostly between countries that have similar productivity, technology, and factor endowments. Indicate whether the statement is true or false ANSWER FALSE
Date: September 10th, 2020
Forward and spot exchange rates A) are necessarily equal. B) do not move closely together. C) are always such that the forward exchange rate is higher. D) move closely together and are equal on the value date. E) are unrelated to the value date. ANSWER D
Date: September 10th, 2020
Current account surpluses are offset by A) the liquidity balances. B) capital account deficits. C) unilateral transfers. D) balance of trade surpluses. ANSWER B
Date: September 10th, 2020
Leontief reconciled his results by arguing that A) American labor is more efficient than foreign. B) American capital is more efficient than foreign. C) Foreign capital is more efficient than American. D) Foreign labor is more efficient than American. ANSWER A
Date: September 10th, 2020
The monetary approach makes the general prediction that A) the exchange rate, which is the relative price of American and European money, is fully determined in the long run by the relative supplies of those monies. B) the exchange rate, which is the relative price of American and European money, is fully determined in the […]
Date: September 10th, 2020
Refer to above figure. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what? What will be an ideal response? ANSWER $5/ton.
Date: September 10th, 2020
Historically those few developing countries which have succeeded in significantly raising their per-capita income levels A) did not accomplish this with import-substituting industrialization. B) did accomplish this with import-substituting industrialization. C) tended to provide heavy protection to domestic industrial sectors. D) favored industrial to agricultural or service sectors. E) did so to the detriment of […]
Date: September 10th, 2020
Which of the following institutions is the most important participant in foreign currency markets? A) A retail customer B) A commercial bank C) A foreign exchange broker D) A central bank E) None of the above. ANSWER B
Date: September 10th, 2020
Which one of the following statements is the most correct? A) If central banks are not sterilizing and the home country has a balance of payments surplus, any associated increase in the home central bank’s foreign asset implies an increased home money supply. B) If central banks are not sterilizing and the home country has […]
Date: September 10th, 2020
Refer to the above table. Suppose the U.S. government (but not Europe) offers a $10 million subsidy? What will be an ideal response? ANSWER In this case Airbus would decide not to enter the market since it knows Boeing will, and that therefore its own production will entail a loss of $5 million.
Date: September 10th, 2020
